African Barrick Gold/China National Gold deal dead in the water – by Lawrence Williams (Mineweb.com – January 8, 2013)

The long running negotiations between Barrick Gold and China National Gold over the former’s African Barrick Gold (ABG) subsidiary have fallen through and ABG’s share price has dived as a result.

LONDON (MINEWEB) – Discussions on the sale of African Barrick Gold (ABG) to China National Gold Group Corporation (CNG) appear to have come to nothing after a rigorous examination of ABG’s operations by the Chinese state-owned gold mining company. London-quoted African Barrick’s share price initially dropped sharply on receipt of a statement from ABG confirming its 73.9% owner, Canada’s Barrick Gold, has now ended its discussions with CNG which means that ABG is ‘no longer in an offer period under the Takeover Code’.

The Barrick announcement went on to say “Given the direct nature of the discussions between Barrick and CNG, this has meant an extended period of uncertainty for ABG as well as significant extra work. Throughout this period, our focus has been on ensuring the ongoing integrity and stability of our operations, and our employees have made an important contribution towards achieving this. At the same time, Barrick has made it clear that it sees considerable long-term value in the ABG asset base. Barrick remains committed to supporting ABG in fully realising the potential of the business.”

This has not been a great day for Barrick with the news also coming through that its plans to develop the huge Reko Diq copper/gold project in Pakistan’s Balochistan province have been declared invalid by the Pakistani high court, although given the company’s recent rethinking on its major project programme, coupled with the location of Reko Diq close in a far from stable part of the world, this may actually be perceived as a positive in some eyes!

But back to ABG – the floating off of Barrick’s African interests back in 2010 at 575p per share has been a major disappointment for its initial investors with the company continually failing to meet targets despite a rising gold price. Indeed its stock price at the time of writing was just 353p/share having fallen 20% this morning on the news that the CNG talks had ceased..

Operationally though, the breakdown of the sales talks could prove to be good news for ABG. As long as a prospective sale of the company had been ongoing, the management focus on some of the problems being experienced at the Tanzanian mines had almost certainly drifted at least a little.